Marching to recovery 5/5

This report was first published in Builders' Merchants News December 2010/January 2011 issue.

Nick McGrellis, managing director of Croydex, the bathroom accessories company says that one of the biggest trends in terms of showers next year is likely to be water-saving features.

“Another trend which we believe is likely to continue in 2011 is that for combi shower sets that have a fixed head and a separate removeable handset. These are a great space-saving solution in the smaller bathroom or en-suite, as they are particularly suitable for in-bath showering and can be added to any existing mixer valve shower.”

Mike Lawrence, managing director of one-stop-shop kitchen distributor, Waterline, says business for merchants in 2011 will come from refurbishment: “Consumers are improving, not moving and the kitchen is the focus of attention. This can be anything from a complete refit to replacing the sink, tap and appliances for a new, up-to-date look.

“Pitiful rates for savers combined with fierce competition within the kitchen industry mean there has never been a better time for consumers to refurbish the heart of the home.”

Gary Hawkins,Impulse Bathrooms’ general manager, says 2011 will continue to be somewhat constricted for the bathroom industry. “There is pressure on the demand for new homes to be built, even if the majority is likely to be social housing, and this should provide some optimism.

“Domestic refurbishment should see a skew towards money-saving home improvements such as water and energy saving. However, this should not mean giving an inroad to cheap, substandard imported product from dubious sources.

“Driving prices down at the expense of quality and performance does not really help any part of the industry. It may seem like a quick fix but it is not a sustainable, long-term business strategy.

“Although the consumer is looking for a ‘deal’ because of the economic climate when the price of everything is rising, it is much preferable to offer real savings like water saving products which, for those with metered supplies.

“I also think the steeply rising cost of fuel will make people ‘let their fingers do the walking’ doing more research on the internet rather than driving around showrooms.The trade should promote the benefits of dealing with merchants with a reputation for reliability, good know-ledgeable advice and support services. This is where the merchant has the advantage over the internet suppliers where price is the main criterion.”

With the growing demand for water and its subsequent increases in cost, as well as the well-known adverse impacts this can have on local environments, the UK market demand for rainwater recycling systems is increasing, according to the UK Rainwater Harvesting Association.

He believes there is a market for rainwater harvesting systems – and one that merchants can use to their advantage. “While the infrastructure market has been hard hit over the last couple of years, the sewage treatment business has remained reasonably buoyant, largely being funded and promoted through the self-build market,” he explains.

Business may be slow for many, but Oaklands is still moving products and growing their business, but not in the market sectors it did 18 months ago, Mr Goodwin admits. “We are focusing on social and affordable housing, working with housing associations and the companies involved with housing associations to promote the use of rainwater harvesting systems in their projects.

“There has been tremendous market growth in this sector over the past two years, chiefly driven by the Homes and Communities Agency, with its partial funding for housing associations and local authorities to get affordablehousing schemes moving.

“The HCA has now had its budgets cut as have local councils and many projects have been culled. What the overall knock-on effect will be remains to be seen.

“Many of the companies we have dealt with over the past 12 months have said there was work in the pipeline, but it all hinged on the type of funding that would become available from the HCA, housing associations and local authorities”.

Mr Goodwin believes that the opportunities for market growth will still be there. “In different parts of the country the need for rainwater harvesting has to be pushed much harder,” he says.

This is particularly true for those regions where there have been water shortages, hosepipe bans, water meters installed and people generally having to pay increased charges for their water.

“It isn’t an everyday sale for a merchant, but one that they need to consider. Rainwater harvesting systems are a non-stock item that they can promote and sell and which offer excellent profit opportunities.”

“Although housebuilding may be a difficult market for most of this year, housebuilders have to consider offering suitable rainwater harvesting systems as a sustainable item that may give them the edge in a competitive market.”

“Merchants need to promote awareness of rainwater harvesting through their contacts with the all housebuilders from the self-builder and small local housing contractors to the large national organisations.”

Timber is a volatile sector and although it has been weathering the economic storm, it has not been without casualties.

Rod Allan, managing director of Finnforest UK says a globally leaner approach to the market means that there will not be the speculative production previously experienced and it is highly unlikely that those sawmills mothballed in 2009-10 will be reopened in 2011.

“Both forest owners and sawmillers will look to manage the market through restricting supply, borne out of the need for timber producers to maintain material prices and reduce market volatility.

“This does mean that the UK will have to continue to compete with other countries for the limited supply that does exist. With forest ownership at its core, it does mean that Finnforest is well placed to compete in both the global and local market places.

“We are seeing a growth in demand for timber products, but it is fair to say that this demand is now coming from the private commercial developer.

“The development of engineered timber systems that respond to the challenges of private commercial market sectors such as retail, leisure, commercial and industrial can provide merchants with solutions by which to reach this audience.”

David McElroy, deputy managing director, commercial of Norbord Europe adds that rising prices will be an ongoing theme during 2011. “One silver lining is that market forces and euro exchange rates mean that plywood – all of which is imported – is now in short supply in the UK. This is good news for the UK’s OSB manufacturers. We can build market share and that’s good for UK jobs, too.

“Because of the price pressures, we are focusing on value lines and value-added products.

“My worst-case scenario is a flat year to come. But it takes a long time to recover from a decade of overspending, so recovery will be very slow.”

SCA Timber Supplies’ sales director Stephen King says the company has noticed more just-in-time purchasing from merchants on planed timber. “There is a degree of hope that private sector housebuilding will take up at least some of the slack. It will be well into the spring, though, if not early summer,before we can see the trends clearly.”

Anders Ek, SCA Timber’s international marketing director in Sweden, adds: “As we look across Europe, there’s a difference in the performance of timber markets. The sharpest drop in performance has so far been seen in Britain, no doubt due to the austerity measures being taken in the UK and their potential effects on construction.

“There have already been curtailments in timber production in many European mills.

“These curtailments will make a difference in reducing sawmills’ inventories, but on price, we will have to see what the supply and demand picture brings in the early part of 2011.”

Set up in the early 1980s, Key Building Supplies is an independent builders’ merchant with strong values about its place in the local community. BMN’s Nichola Farrugia spoke to the company as it prepares to open a new store called Key DIY next month.

In the past, very few merchants have felt comfortable selling PVC-U windows and doors, despite it being a lucrative market. However, that’s all set to change as NMBS-approved supplier Crystal Direct is simplifying this process. BMN’s Nichola Farrugia met with Steve Halford, managing director, to find out more.